Vodafone To Buy Cable & Wireless Worldwide For $1.7 Bln - Update

4/23/2012 3:12 AM ET

Putting an end to takeover talks, telecom giant Vodafone Group Plc (VOD,VOD.L) has decided to buy Cable & Wireless Worldwide Plc. (CW.L) for 38 pence per share in cash. The deal has a value of about 1.04 billion pounds ($1.68 billion), the company said Monday. CWW shares are surging over 16 percent on the LSE.

The offer represents a 92 percent premium to the closing price of 19.8 pence per CWW share on February 10, which was the last business day before the commencement of the offer period. Vodafone reserves its right to increase the offer if a competitive bid emerges.

Vodafone, which first made an official approach for CWW in early February, emerged as the sole bidder after India-based telecommunications company Tata Communications Ltd. (TCL) abandoned its takeover efforts last week stating it was unable to reach an agreement with CWW on an offer price.

Vodafone Europe B.V. and CWW have now reached an agreement on the terms of the recommended cash offer, which will be effected by way of a court-sanctioned scheme of arrangement.

CWW specializes in providing communication networks and services, including managed voice, data and IP based services and applications to large corporates, governments, carrier customers and resellers.

The company's global enterprise unit, which caters to firms based outside Britain, was one among its better-performing arms. However, its U.K. business has been suffering from the government's austerity measures and a weak economy.

C&W Worldwide has been going through a tough time since its spinoff from parent Cable & Wireless in March 2010, making a series of profit warnings and suffering numerous management changes. The company's market value has declined more than 70 percent over the last two years, making it an attractive acquisition target.

The deal will strengthen the enterprise business of Vodafone Group in the UK and internationally. It also presents attractive network and other cost saving opportunities for Vodafone.

Vittorio Colao, CEO of Vodafone Group, said, "The acquisition of Cable & Wireless Worldwide creates a leading integrated player in the enterprise segment of the UK communications market and brings attractive cost savings to our UK and international operations."

The CWW directors have agreed to recommend unanimously that CWW shareholders vote in favor of the scheme. The directors have agreed to do so regarding their own beneficial holdings that total about 0.09 percent of CWW shares.

Vodafone has received irrevocable undertakings and letters of intent to vote in favor of the scheme in respect of 510.55 million CWW shares, representing 18.58 percent of the ordinary share capital of CWW.

Vodafone will fund the offer from its own resources. UBS is acting as sole financial adviser to Vodafone. Barclays and Rothschild are acting as joint financial advisers to CWW.